VEGOILS-Palm oil rebounds from near 3-year low - RTRS
03-Oct-2012 14:05
Prices bounce after falling to 2,230 ringgit, lowest since Nov 2009 Palm oil dropped 8.7 pct on Tues, steepest since 2008 crisis Futures down 27 pct so far this year Traders concerned about stock build in Malaysia
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Oct 3 (Reuters) - Malaysian palm oil futures rebounded from their lowest in nearly three years on Wednesday as investors looked for bargains, although traders said the recovery could be short-lived as fundamentals remain weak.
Palm oil, which on Tuesday suffered its steepest daily fall since the 2008 financial crisis on weaker-than-expected demand and rising stocks, dropped further in early trade, hitting 2,230 ringgit per tonne, a level not seen since November 2009.
But the lower prices tempted market participants and the benchmark December contract FCPOc3 had surged 2.9 percent from the previous day's close to 2,321 ringgit ($759) per tonne by the midday break, on track to snap five straight sessions of losses.
"When prices dropped so sharply, the market was severely oversold," said a trader with a local commodities brokerage in Malaysia.
"Today maybe there will be some rebound or technical pullback. I don't think it will last that long, but it will try to cover whatever gaps there are in technical charts."
Total traded volumes stood at 25,030 lots of 25 tonnes each, nearly double the usual 12,500 lots as the previous day's plunge prompted enticed traders. Futures have lost almost 27 percent so far this year.
Traders and plantation owners are bracing for September inventory levels to surpass August's 10-month high as strong production trumps demand, with palm oil exports in September hovering around 1.4 million tonnes, barely moving from a month ago. PALM/ITS PALM/SGS
"We expect this trend (of production outpacing exports) to continue through the fourth quarter, keeping inventory levels above 2 million tonnes, a psychological range seen as denoting an ample supply of CPO (crude palm oil) in the market," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, wrote in a note to clients.
"Hence, the CPO price upside should be limited."
In a bearish sign for palm oil, Brent crude futures slipped towards $111 per barrel on Wednesday, hurt by persistent concerns over global growth and oil demand, while Europe's festering debt crisis added to uncertainty. O/R
In other vegetable oils markets, U.S. soyoil for December delivery BOZ2 slipped 0.8 percent in Asian trade. The Dalian Commodity Exchange will resume trading on October 8 after a week-long holiday in China.

India's soyoil futures hit 1-year low following palm oil - RTRS
03-Oct-2012 13:02
MUMBAI, Oct 3 (Reuters) - Indian soyoil futures plunged 4 percent on Wednesday to hit their lowest in nearly a year, following a sharp fall in palm oil on Tuesday and as demand was weak in local spot markets.
The November soyoil contract NSOc2 on India's National Commodity and Derivatives Exchange was down 3.9 percent at 602.5 rupees ($11.45) per 10 kg by 0454 GMT, after falling to 601.9 rupees earlier, the lowest for the second-month contract since Oct. 14, 2011.
Malaysian palm oil futures suffered a steep 8.7 percent drop on Tuesday, sending prices to 2,250 ringgit per tonne, a level unseen since November 2009. (Full Story)
The Indian market was closed on Tuesday due to a national holiday.
India fulfils more than half of its edible oil requirement through imports, mainly palm oil produced in Malaysia and Indonesia.

GLOBAL MARKETS-Dollar firms on uncertainty over Spain bailout timing
TOKYO, Oct 3 (Reuters) - The dollar firmed and most riskier assets edged lower as uncertainty over the timing of Spain's request for an international bailout added to worries about slowing global growth.
"The potential timing (for a Spanish request) is obviously in flux and complicated by upcoming elections. Headlines and speculation are likely to continue to induce near-term market volatility," Barclays Capital said in a research note.

U.S. crude inventories rose last week, products fell -API
NEW YORK, Oct 2(Reuters) - U.S. crude oil inventories rose less than expected last week while oil product stockpiles fell slightly, data from the American Petroleum Institute showed on Tuesday.
Crude inventories rose 462,000 barrels in the week to Sept. 28, compared with analysts' expectations for a build of 1.5 million barrels, the API reported.

NATURAL GAS-US natgas futures reverse course, end up on weather
NEW YORK, Oct 2 (Reuters) - U.S. natural gas futures ended higher on Tuesday for a sixth day, as cool forecasts for the Northeast and Midwest and rising demand offset early profit taking and technical selling after recent strong gains.
"There is likely to be an above average level of heating related gas demand over the next several weeks which has brought in a new round of buyers while sending the next layer of shorts to the sidelines," Energy Management Institute's Dominick Chirichella said in a report.

EURO COAL-Prices dip 55c/T, buyers remain scarce
LONDON, Oct 2 (Reuters) - Prompt physical coal prices slipped by up to 55 cents a tonne on Tuesday but remained in the $83-$88 a tonne range seen for the past few weeks with few trades reported.
"I don't think South African strikes could be a game changer but would probably give the market a little pop, as the Fenoco action did," said Marcus Garvey, analyst with Credit Suisse.

Adventa's board has proposed that upon the completion of the sale of Adventa's glove business to the Low family and Southern Capital (via an SPV called Aspion Sdn Bhd), the company will declare a one-off distribution of RM1.70/share. This will be undertaken through a special dividend of RM1.30/share and a capital reduction and payment of RM0.40/share. The special dividend is not subject to any shareholder or regulatory approval. However, the capital reduction and payment requires shareholder approval. The entitlement date for the special dividend will be announced in due course once approval for the capital reduction and payment has been obtained. (Bursa Malaysia)

The Securities Commission suffered a setback yesterday when the Court of Appeal rejected the regulator's bid to disqualify a High Court judge from hearing a suit challenging conglomerate Sime Darby's controversial purchase of a 30% interest in property group E&O. The three-member Court of Appeal panel unanimously dismissed an application by the SC to force High Court Judge Abang Iskandar to recuse himself from hearing a suit brought by minority shareholder Michael Chow Keat Thye, who is seeking a court order to compel the watchdog agency to force Sime Darby to make a general offer for shares in the property concern after it acquired the commanding stake for RM776m in Aug last year. (Financial Daily)

Tenaga Nasional has awarded a RM16.4m contract to Pestech International Bhd's joint venture to undertake a power project in Johor. Pestech said the contract was to supply and commission a 132KV and 33KV switchgear, transformer and ancillary equipment for the Bukit Siput extension in Johor. Work is expected to start within one month upon site possession and the completion date is 455 days. The joint venture comprises of its unit Pestech Sdn Bhd and Mega Linear Sdn Bhd. (StarBiz)

The emergence of high-frequency trading means the risk of financial shocks spreading fast is “greater than ever”, Datuk Seri Najib Razak, has warned. His comments are the first sign that some political leaders in emerging markets have started to become uneasy over the spread of high-frequency trading and possible systemic risks associated with it. Controversy about such high-speed electronic trading has been intensifying as regulators worry that there are insufficient risk controls to prevent markets spiralling out of control due to erroneous trades. Electronic trading is spreading rapidly to Asia as western institutions seek to trade higher-growth markets using the same technology that is used to deal in US and European markets. Datuk Seri Najib said the recession that followed the 2008 crisis had created volatility in commodity markets. "Nor has that threat of contagion been wholly contained, either. Our economies are more closely linked that they were in 1997 [during the Asian financial crisis],” he told a conference hosted by Khazanah, Malaysia’s sovereign wealth fund. “And with the opening up of markets and the emergence of high-frequency trading, the potential for regional shocks to spread fast, far and wide is greater than ever.” There is very little high-frequency trading on Bursa Malaysia, although foreign trading interest in its palm oil derivatives is growing. HFT is more common in Asia’s derivatives markets than in the region’s equity markets, where local stamp duty and relatively wide bid-ask spreads have deterred such trading. (Financial Times)

Bursa Malaysia expects the listing of DanaInfra Nasional Bhd's retail bonds by year end to bring about rapid growth of the new product and the overall exchange traded bonds and sukuks (ETBS).CEO Datuk Tajuddin Atan said with the expenses of such issuances being given double deduction for a period of four years, ETBS are expected to grow rapidly and may attract foreign issuances out of Malaysia. DanaInfra's RM300m retail bonds will be the first ETBS to be listed on the local bourse. DanaInfra's retail bonds are to raise financing for the MRT projects. (BT)

Two new roads will be built along Tun Dr Lim Chong Eu Expressway to cater to the traffic heading to and from the second Penang Bridge. State Public Works, Transportation and Utilities Committee chairman Lim Hock Seng said the two roads - one connecting the first and second bridge while another connecting the second bridge to Batu Maung and Teluk Kumbar - will cost an estimated RM262m and RM161m respectively. "...an open tender for the projects is expected to be called by the end of the year." he said. The projects will be completed a year after the completion of the second Penang bridge in Sep 2013. Construction of the 16.9km second Penang bridge is ahead of schedule with c.85% of the works completed. The bridge costs RM4.5bn. (The Sun)

CIMB Group deputy CEO Renzo Viegas said "We're targeting to grow our credit cards by about 10% to 15% next year. We're the fourth largest player, in terms of loan base,". "The cards are consolidating but the spend is still there ... and then you have the debit card which is available to everybody. In more developed countries, the debit card (usage) is much higher than credit card, in terms of spending. "In about 3 to 5 years, I wouldn't be surprised if you have more people using their debit cards for spending rather than credit cards," he remarked. (BT)

Maybank has rolled out a new credit card, the Maybank World MasterCard, to gain a bigger market share of affluent consumers in Singapore. Citing data from the Inland Revenue Authority of Singapore (IRAS), Maybank said that the number of consumers in the income bracket of $100,001 and above hit 218,200 in 2010, growing 42% over a three-year period. The bank is looking to boost its total card base by 10 per cent within the first two years of the card's launch. Perks of the card - aimed at those with a minimum annual income of $120,000 - include a sizeable 19.7% discount at Shell petrol stations in Singapore, of which cardholders will be given an upfront 15.5% discount and the balance (4.2%) can be offset through accelerated rewards points against the final amount billed. Maybank is offering 10x rewards points for every $1 spent when customers dine at selected restaurants, including those under the Les Amis Group, or shop at merchants such as Palais Renaissance and DFS Galleria Singapore. In addition, cardholders also have complimentary access to private terminal JetQuay at Changi Airport. (Business Times Singapore)

Malaysia Airports (MAHB) has set up a JV company with a Qatari to undertake facilities maintenance at airports, including the new Doha International Airport. MAHB will hold a 49% stake in the JV. MAHB said it would enable the group to continue pursuing opportunities in the development, operation and management of airports overseas. (Star Biz)

AirAsia is boosting connectivity from Kuala Lumpur to Sarawak and Sabah with additional frequencies to Bintulu, Kuching and Tawau. "The Kuala Lumpur to Tawau flights will be increased to 25 times weekly from the present 21 and takes effect on Nov 12. The Kuala Lumpur to Bintulu flights will be increased to 17 times weekly from 14 and operations commence on Nov 13," said AirAsia in a statement. The extra flights from Kuala Lumpur to Kuching will be available 16 times weekly from the current 12, beginning December 1, 2012 to February 5, 2013. The extra frequency to Kuching will be available with an all-in-fare from as low as RM98 one way. The extra frequency will operate on Mondays, Tuesdays, Thursdays and Saturdays. (Bernama)

Kejuruteraan Samudra Timur Bhd has secured a fresh contract from Petronas Carigali to provide tubular handling equipment and services. Samudra said the contract was for the D-21, Samarang Phase 2AD and Tangga Barat Cluster Development Phase 1 projects from Sep-2012 to Aug-2013. "There is no indication on the value of the contract in the award and it is subjective depending on the activities level by Petronas Carigali throughout the contract period," it said. Samudra also said Petronas Carigali had extended a contract to provide tubular handling equipment and services to the oil exploration company's drilling and workover programmes. The contract was extended by four months from Feb 23, 2013 to June 27 that year. (StarBiz)

The shipbuilding and ship repairing industry will generate 20k employment opportunities by 2020, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said. "A challenge that we face in this industry is a shortage of human capital, with a number of high-value jobs being done outside Malaysia. Basic ship repairing and ship building is done in Malaysia but when it comes to the finishing touches, it goes elsewhere. This due to the lack of skilled manpower and we need to address it. "To date there are about 30k people working in this sector in Malaysia and it will increase to 50k by 2020," he said. (Starbiz)

Boustead Holdings Bhd unit, Boustead Naval Shipyard Sdn Bhd, has issued a letter of award (LOA) to Contraves Advanced Devices Sdn Bhd (CAD), in relation to the RM203.79m contract for second generation patrol vessels/littoral combat ships. CAD is a subsidiary of Boustead Heavy Industries Corp. The LOA covers an implementation period of up to 10 years. (Bernama)

Naim Holdings aims to move into real estate investment trust (REIT) business with properties en route for launching this year of gross development value (GDV) of up to RM400m. Its corporate services senior director, Ricky Kho Teck Hock, said over the next 6 to 9 years, the group aimed to launch an accumulated properties of over RM3bn in value. (Bernama)

Johor Petroleum Development Corp (JPDC) has received many enquiries from supporting industries in the oil and gas sector to operate in the Pengerang Integrated Petroleum Complex (PIPC).CEO Mohd Yazid Jaafar said the presence of these industries was important to ensure the smooth running of various facilities in PIPC. "We also plan to offer financial, legal and insurance services related to the oil and gas sector. The whole ecosystem must be ready, that is our challenge," he said, JPDC is a federal government agency established to coordinate the development of the oil and gas sector in Johor. The PIPC project involves the development of 8k ha in Pengerang, of which about 2.6k ha were acquired by Petronas to develop PIPC which involved an investment of RM60bn. (Starbiz)

Lee Corp Bhd has become the latest company to join the list of Practice Note 17 (PN17). PN17 refers to a company in financial trouble because successive losses have eroded its shareholders’ funds or has ceased its business operations. A PN17 company must regularise its condition within a certain timeframe, failing which the stock will be suspended from trading and face delisting procedures. (BT)

Pestech International Bhd says the JV between its unit Pestech Sdn Bhd and Mega Linear Sdn Bhd has won a contract worth RM16.4m from Tenaga Nasional Bhd to undertake a power project in Johor. The contract was to supply and commission a 132KV and 33KV switchgear, transformer and ancillary equipment for the Bukit Siput extension in Johor. (BT)

Naza TTDI and Australia's Lend Lease plan to undertake a mixed-use development project in the former's KL Metropolis flagship development with a potential gross development value (GDV) of RM4bn. Both companies signed a heads of agreement to formalise a joint venture to develop 10.94 acres of land at the site. In a joint statement, they said the agreement sets the scope and commercial principles for a mixed-use development including a regional retail centre, office, hotel and residences. The agreement was executed by Naza TTDI's deputy executive chairman and group managing director, SM Faliq SM Nasimuddin and Lend Lease's CEO for Asia, Rod Leaver. Australia's Lend Lease is a fully integrated international property and infrastructure group. KL Metropolis is Naza TTDI's 75.5-acre high-impact project with a GDV of RM15bn which it envisages would thrust the country as a preferred MICE destination in the region. CIMB Investment Bank Bhd is the financial adviser to Naza TTDI for the KL Metropolis project. (StarBiz)

Dijaya Corp plans to launch serviced residences in Kuala Lumpur at RM2,000 per square foot (psf) to RM2,500psf. Senior Dijaya Corp officials said such price is now the going rate for new luxury properties in the city centre. "We are looking at that price range for now. There are some projects launching at RM2,500psf in the city centre. Since we are launching only next year, we may re-look the pricing then," said its executive director Koong Wai Seng. Dijaya deputy managing director, Dickson Tan, said Dijaya is looking to acquire smaller developers and companies with sizeable landbank to become one of the country's biggest developers. (BT)

UMW: New centre further boosts UMW Toyota’s commitment
UMW Toyota Motor Sdn Bhd has officially opened its flagship body and paint centre at its Integrated Quality Hub (IQH) in Bukit Raja here. The centre was built on a 2.28ha site and forms an integral part of the company's over RM200m IQH. The centre is equipped with 42 work bays, four paint booths and state-of-the-art repair equipment that meet the Toyota standards and have a repair capacity of over 6,150 units per year. UMW Toyota's body and paint repair operations in Sungai Rasah will be relocated to Bukit Raja, thus providing better services to customers. (Business Times)

Scomi Group Berhad & IJM: Deal sealed in a week
The entry of IJM Corp Bhd into Scomi Group Bhd was put together in a span of a week, with both parties working around the clock to ink the agreement, sources close to the deal have revealed. Sources also explained that Scomi CEO Shah Hakim Zain had initiated the deal with IJM, driven partly by the nearing of a deadline to settle RM150m of bonds that would be due by this end month. In related developments, sources have told that IJM was likely to eventually get three board seats on the Scomi board. Sources also said that yesterday Scomi for the first time in nearly two years, had a briefing with over 30 research analysts and fund managers. (StarBiz)

IHH: Turkey unit delisted
The Istanbul Stock Exchange (ISE) has announced its approval for the delisting of Acibadem Saglik Hizmetleri Ve Ticaret AS, IHH Healthcare Bhd told Bursa Malaysia. Acibadem shares would cease to be traded on the ISE after the second session of Oct 4, it said. IHH owns 60% in Acibadem, Turkey's largest private healthcare provider. (StarBiz)

RHB: Completes second issuance of US$200m notes
RHB Bank Bhd had completed its second issuance of US$200m senior unsecured notes on Sept 28. The transaction was six times oversubscribed and the order book was well diversified. The success of this transaction is testimony of investors' confidence in RHB Bank, its credit strength, as well as the strong shareholders' support,” said its managing director Johari Abdul Muid, in a statement yesterday. (Bernama)

Digi: Tablet plans for as low as MYR15. DiGi Telecommunications Sdn Bhd has launched new offerings of affordable tablet plans from as low as RM15 monthly for postpaid customers starting yesterday. This new offering is in line with the government's nation-building exercise to make mobile broadband more affordable to the consumers. (Source: Business Times)

Malaysia is well-prepared to handle the current global economic crisis due to its experience in addressing the Asian economic crisis in the late 1990s, PM Datuk Seri Najib Tun Razak said. The government had responded positively with better governance, capitalisation and liquidity in handling the crisis during that time, he said. "The risk still remains. But thankfully, the government's successful management of the economy meant that Malaysia was fortunate to emerge from the credit crisis in a position of relative strength," he said. (Bernama)

The Malaysian economy is going strong and is set to pass the trillion-ringgit milestone next year, said PM Datuk Seri Najib Tun Razak yesterday. He said that the strength of the country’s economy had allowed him to craft a Budget that was responsive to the “people’s needs” and that was also fiscally responsible. (Malaysian Insider)

Domestic demand continues to spur Asia’s economic growth on the backdrop of slowing external demand and uncertainties in the financial markets. Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said that the growing importance of domestic demand in Asia was creating a huge cumulative domestic market and a case for greater regional integration. Greater regional and intra-regional integration of the emerging economies through the proliferation of interlocking networks of trade, investment and finance, have contributed to support economic activity in the emerging economies, she said. The decline in external demand from the advanced economies had been partially offset by stronger domestic demand to spur economic activities in Malaysia, she added. This was due to robust resumption of private consumption and investment activities and the diversification of exports to the regional economies in new product segments, she said. (Starbiz)

Higher energy prices forced annual inflation in advanced economies to rise to 2.0% in Aug from 1.9% in Jul, the OECD said. (AFP)

The global economy will need to have created 600m new jobs between 2005 and 2020 to absorb young people entering the work force, spur development, empower women and prevent unrest, the World Bank said. (Bloomberg)

The US ICSC-Goldman Store Sales index gained 2.4% yoy in the 29 Sep week (2.9% in the earlier week), whilst on a wow basis, the measure fell 0.3% (+0.6% in the prior week). (Bloomberg)

US total vehicle sales rose to an annualised 15.0m rate in Sep (14.5m in Aug), overshooting consensus of 14.5m. (Bloomberg)

Federal Reserve Chairman Ben Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve reaches for new tools to spur the three-year recovery and reduce unemployment stuck above 8%. (Bloomberg)

The European debt crisis could weigh on the world economy for years, forcing policy makers to rethink their approaches to restoring growth and boosting job creation, the World Bank's new chief economist Kaushik Basu said. (WSJ)

Consumer spending in emerging market powerhouses China and India is expected to triple by 2020 to a combined US$10tr a year, and will spend a combined total of US$64tr on goods and services in the decade leading up to 2020. (Reuters)

Japanese economic growth is set to slow as the boost from reconstruction-related demand fizzles, ratings firm Standard & Poor's said. (WSJ)

Japan's new finance minister Koriki Jojima said he would be concentrating on passing a key debt-financing bill for now and will make a decision on further stimulus for the flagging economy at a later date. (AFP)

Singapore's Purchasing Managers Index slipped deeper into negative territory last month, dropping to 48.7 points from Aug's 49.1. In the electronics sector, the index posted a marginal fall of 0.7 point over the previous month to moderate at a reading of 50.0. (CNA)

Vietnam’s exports are expected to total US$113bn this year, US$4bn over the target earlier in the year, said the director of the Ministry of Industry and Trade's planning department, Nguyen Tien Vy.The department added that the total retail sales of goods and services is estimated to grow 18-19% against 2011 inclusive of price hikes, much lower than the rates in previous years as the market is now affected by many factors, including consumption decline. (Vietnam News, Saigon Times)

Vietnam’s HSBC manufacturing PMI rose from 47.9 in Aug to a five-month high of 49.2 in Sep. (Saigon Times)

Asia FX By Cornelius Luca - Tue 02 Oct 2012 17:11:58 CT (Source:CME/www.lucafxta.com)
The appetite for risk was mixed on Tuesday after Spain didn't ask for a bailout, thus leaving unclear its next step in its debt crisis. The euro and franc ended with small gains, the pound was flat, and the commodity currencies and yen fell. The Australian dollar led the losses following the unexpected rate cut by the RBA. Re-positioning at the start of the fourth quarter remains the main theme, despite by Spain and other Eurozone peripherals' ongoing problems. The US stock markets ended mixed. Gold, oil and silver fell. The short-term outlook for the major foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is short on all foreign currencies. Good luck!

Overnight
US: The ISM New York in the US rose to 52.9 in September from 51.4 in August.

Today's economic calendar
Australia: HIA new home sales for August
Australia: Trade balance for August

Asian Stocks Decline Amid Spain Bailout, Growth Concerns (Bloomberg)
Asian stocks fell amid speculation Spain will request a bailout even as Prime Minister Mariano Rajoy said there are no imminent plans to ask for aid and before the release of Chinese data on the services industry. Canon Inc. (7751), the world’s biggest camera maker that gets about 31 percent of sales from Europe, lost 0.2 percent in Tokyo. Daiichi Sankyo Co. dropped 4.5 percent as the Japanese drug maker and partner ArQule Inc. halted a study of a lung- tumor treatment. APN News & Media Ltd. retreated 8.1 percent after the Australian newspaper publisher said it has nothing to announce at this stage on an ongoing review of assets. The MSCI Asia Pacific Index (MXAP) fell 0.2 percent to 121.91 as of 9:43 a.m. in Tokyo. Markets in China and South Korea are closed today for holidays, while Hong Kong reopens for trading later following a long weekend.
“You’ve got a lot of uncertainty at the moment, and I think the market is going through a little bit of a consolidation phase,” said Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “Will Spain request a bailout? You’ve got U.S. presidential elections in five weeks and you’ve got a fiscal cliff looming at the end of the year.”

S&P 500 Erases Loss as Apple Recovery Overshadows Spain (Bloomberg)
The Standard & Poor’s 500 Index rose, erasing losses in the final hour of trading, as a rebound in Apple (AAPL) Inc. overshadowed disappointment after Spanish Prime Minister Mariano Rajoy said a bailout request is not imminent. Apple, the largest company by market value, reversed a 1.3 percent drop to end the day higher. Citigroup Inc. rose 1.6 percent as KBW raised its rating. MetroPCS Communications Inc. (PCS) rallied 18 percent after Deutsche Telekom AG said the companies are in talks to combine U.S. wireless units. Chipotle Mexican Grill Inc. (CMG) slid 4.2 percent after hedge fund manager David Einhorn recommended betting against the restaurant chain. Mosaic (MOS) Co. lost 3.9 percent amid disappointing earnings.
The S&P 500 rose 0.1 percent to 1,445.75 at 4 p.m. New York time, after dropping as much as 0.4 percent. The Dow Jones Industrial Average lost 32.75 points, or 0.2 percent, to 13,482.36. Volume for exchange-listed stocks in the U.S. was 5.8 billion shares, or 3.4 percent below the three-month average. “Spain took down the market, but people looked past it and found some good entry points in technology stocks,” Frank Ingarra, who helps manage $1.4 billion at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview. “Apple is such a big part of the market and it’s been on a downtrend for a couple of days, so it makes sense for the stock to get some relief and rebound which would translate into the indexes.”

Japan Stocks Retreat Amid Mixed Signals on Spain Bailout (Bloomberg)
Oct. 3 (Bloomberg) -- Japanese stocks swung between gains and losses after Spanish Prime Minister Mariano Rajoy denied the country is imminently seeking a bailout. Toyota (7203) Motor Corp. led carmakers higher on better-than-expected U.S. sales. Konica Minolta Holdings Inc. (4902), an imaging-equipment maker that gets 28 percent of its sales in Europe, dropped 0.8 percent. Toyota, Asia’s biggest carmaker by market value, rose 1.4 percent after its U.S. sales jumped 42 percent last month. Daiichi Sankyo Co. fell 4.8 percent after advisers recommended the drugmaker end the trial of a cancer drug being developing with ArQule Inc. The Nikkei 225 Stock Average (NKY) rose less than 0.1 percent to 8,793.22 as of 9:30 a.m. in Tokyo after falling as much as 0.4 percent. The broader Topix Index slid 0.1 percent to 730.74, headed for a fourth daily decline.
“You’ve got a lot of uncertainty at the moment, and I think the market is going through a little bit of a consolidation phase,” said Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “Will Spain request a bailout? You’ve got U.S. presidential elections in five weeks and you’ve got a fiscal cliff looming at the end of the year.”

European Stocks Decline; Alstom, Erste Drop (Bloomberg)
European stocks declined, after yesterday rallying the most in more than three weeks, as companies from Alstom SA to Erste Group Bank AG (EBS) sold shares. Alstom sank 4.9 percent after selling a 350 million-euro ($453 million) holding. Erste Group slipped 2.8 percent after the lender’s largest shareholder sold a 235 million-euro stake. PostNL NV (PNL) added 4.4 percent after the postal company said it will increase rates next year. The Stoxx Europe 600 Index (SXXP) slipped 0.3 percent to 271.62 at the close after earlier rising as much as 0.4 percent and falling as much as 0.7 percent. The equity benchmark has still rallied 16 percent from this year’s low on June 4 as central banks in the U.S. and the euro area turned to bond purchases to stimulate growth and ensure the transmission of record-low interest rates.
“It’s a difficult period for investors to place bets,” said David Hussey, who helps oversee $218 billion as head of European equities at Manulife Asset Management in London. “The global economy is going to recover, it’s just going to take a while. In the long term, we are bullish on equities, but that is really long term. In the interim, we will continue to have this horrible trading-range type mentality.” The Stoxx 600 and the Euro Stoxx 50 Index, the gauge of the largest companies in the euro area, have both failed to post back-to-back gains or losses for the last 10 days. European stocks yesterday rallied the most since Sept. 6 after stress tests bolstered confidence in Spain’s banking system and a report showed U.S. manufacturing unexpectedly expanded last month. The Stoxx 600 fell 2.7 percent last week amid concern the U.S. Federal Reserve’s bond-buying program will fail to encourage growth.

Emerging-Market Stocks Rise for a Fourth Day on U.S. Data (Bloomberg)
Emerging-market stocks rose for a fourth day, the longest winning streak in more than two weeks, after an unexpected rebound in U.S. manufacturing improved the outlook for exporters. The MSCI Emerging Markets Index (MXEF) climbed 0.1 percent to 1,006.23. Samsung Electronics Co. (005930), which got 20 percent of its sales from America last year, climbed to a five-month high in Seoul. Equity gauges in Indonesia, Turkey and Mexico increased. Brazil’s Bovespa index dropped with homebuilder Gafisa SA among the biggest decliners. U.S. manufacturing unexpectedly expanded last month and Chinese new export orders for September rose from the month before, reports showed yesterday. Federal Reserve Chairman Ben S. Bernanke pledged to maintain record economic stimulus, stoking appetite for riskier assets. The developing nations’ gauge pared some of its gains after Spanish Prime Minister Mariano Rajoy says he has no plans to request a bailout soon.
“The latest data from the U.S. showed manufacturing is back in expansionary territory and that was a nice upside surprise given that emerging markets are driven by exports for the most part,” Alec Young, a New York-based global equity strategist at S&P Capital IQ, said by phone today. “The liquidity rally needs to transition to a growth rally, and the PMI is evidence that growth is stabilizing. We need to see more of it but it’s a good first step.”

Aussie Dollar Falls as RBA Seen Cutting Interest Rates Further (Bloomberg)
Australia’s dollar fell to the lowest level in almost four weeks amid speculation the central bank will lower interest rates again following a quarter-point cut yesterday to cushion the impact of slowing global growth. The so-called Aussie remained lower against most of its major peers after a report showed the country’s services industry contracted by the most in five months and before data forecast to show the trade deficit widened. Swaps indicate an almost 90 percent chance the Reserve Bank of Australia will lower its benchmark rate from 3.25 percent to a record low 2.75 percent by the end of March next year, according to data compiled by Bloomberg. They show a 75 percent probability of a quarter-point reduction in November. “I think the Reserve Bank will cut again probably next month,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney. “I don’t think the RBA will cut as much as the market is expecting, but those expectations have been one thing that has pushed the Aussie down.” Australia’s dollar touched $1.0251, the lowest level since Sept. 6, before trading at $1.0252 as of 10:40 a.m. in Sydney, 0.2 percent below yesterday’s close in New York. The currency also traded near a one-year low against the New Zealand dollar. It fetched NZ$1.2412, having fallen as low as NZ$1.2372 yesterday, the weakest since September 2011. The New Zealand dollar, nicknamed the kiwi, declined 0.2 percent to 82.60 U.S. cents. Australian bonds were little changed, with the 10-year yield at 2.97 percent.

FOREX-Euro steadies, seen vulnerable to Spain uncertainty
LONDON, Oct 2 (Reuters) - The euro recovered slightly from a three-week low against the dollar but still looked vulnerable to selling as uncertainty over when Spain may seek a bailout unnerved European financial markets.
"If Spain requests (aid) proactively, I think the euro would have a lot more upside, perhaps to $1.33," said Sim Moh Siong, FX strategist for Bank of Singapore.

‘Budgetary Crystal Meth’ Risks U.S. Haven Status, Gross Says (Bloomberg)
Pacific Investment Management Co.’s Bill Gross said the U.S. will no longer be first destination of global capital in search of safe returns unless the gap between spending and debt is addressed. Major nonpolitical organizations agree that “when it comes to debt and to the prospects for future debt, the U.S. is no ’clean dirty shirt,’” Gross wrote in his monthly investment outlook posted on the Newport Beach, California-based Pimco’s website today. “The U.S., in fact, is a serial offender, an addict whose habit extends beyond weed or cocaine and who frequently pleasures itself with budgetary crystal meth.” The International Monetary Fund, the Congressional Budget Office and the Bank of International Settlements compute a “fiscal gap,” which is a deficit that must be closed either with spending cuts, tax hikes or a combination of both, which keeps a country’s debt/GDP ratio under control, wrote Gross, the manager of the world’s biggest bond fund.
“Unless we begin to close this gap, then the inevitable result will be that our debt/gross domestic product ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline,” Gross wrote. “Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the ‘Ring of Fire.’”

Bernanke Seeks Gains for Stocks in Push for Jobs: Economy (Bloomberg)
Chairman Ben S. Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve reaches for new tools to spur the three-year recovery and reduce unemployment stuck above 8 percent. Bernanke, setting the stage for a third round of quantitative easing in an Aug. 31 speech in Jackson Hole, Wyoming, said the strategy works in part by boosting the prices of assets such as equities. In a speech yesterday in Indianapolis he said higher stock and home prices would provide further impetus to spending by businesses and households. “It’s pretty clear that the stock market is the most important transmission mechanism of monetary policy right now,” said Peter Hooper, chief economist at Deutsche Bank AG in New York. “That’s where you’re getting most of the action in terms of lift to the economy. It’s the stock market that’s going to have to be carrying the load.”
The Fed’s large-scale asset purchases will probably lift stocks by 3 percent over the two years following the Sept. 13 announcement of QE3 as low yields on government bonds push investors into risker assets, according to a Sept. 27 report by Deutsche Bank economists. They also estimate that QE will lift home prices by 2 percent over two years, assuming the Fed maintains purchases of Treasuries and mortgage debt through 2013. The gains in stocks and real state could boost economic growth by 0.5 percentage point over the next two years, enough to add about 500,000 jobs and cut the unemployment rate by 0.3 percentage point, according to Hooper, who worked for 26 years as an economist at the Fed board in Washington.

Investors Doubt QE3 Lift to U.S. Discretionary Spending (Bloomberg)
Investors are proving skeptical that the Federal Reserve’s announcement of additional quantitative easing will get Americans to spend more. The Consumer Discretionary Select Sector SPDR Fund -- which includes Amazon.com Inc. (AMZN) and Macy’s Inc. (M) --has lagged behind the Consumer Staples Select Sector SPDR Fund by 2.8 percent since Sept. 14, the day after the Fed unveiled plans to buy mortgage- backed securities at a pace of $40 billion a month until the labor market improves. During the preceding six weeks, the discretionary exchange-traded fund outpaced its defensive counterpart, which includes Procter & Gamble Co. (PG) and Coca-Cola Co. (KO), by 9.2 percent.
The relative performance between these funds since August suggests investors “bought the rumor and sold the news,” said Peter Cook, chief investment officer at Performance Trust Investment Advisors in Chicago. Still, “aggressive” monetary policy, such as QE3, probably will have a limited impact on consumer spending for nonessential goods and services, so the economy will continue to slow, he said. U.S. gross domestic product expanded at a 1.3 percent annual rate in the second quarter, less than the previous estimate of 1.7 percent and below the first quarter’s 2 percent pace, data from the Commerce Department show. The recent weakening in discretionary stocks relative to staples differs from 2010, when Fed Chairman Ben S. Bernanke’s speech at the annual Jackson Hole, Wyoming, conference in late August foreshadowed QE2, setting off almost six months of outperformance, said Jack Ablin, who helps oversee about $65 billion of assets as chief investment officer at BMO Private Bank in Chicago.

Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened (Bloomberg)
Since 2009, Anita Reyes’ wages have been as frozen as Lake Minnetonka in January. While the U.S. economy was recovering from the Great Recession, Reyes, 52, a casino dealer from Minneapolis, was dining on $1.67 cans of soup and searching for a way to keep her house, which was foreclosed on last October. “I went backwards,” Reyes said. “Two years ago, three years ago, I didn’t know I’d be looking at being homeless.” Stephen Hemsley’s salary has been frozen too. His income hasn’t. The chief executive officer of Minnetonka, Minnesota-based health insurer UnitedHealth Group Inc. (UNH) earned $1.3 million in salary every year since 2007. Still, as the economic recovery took hold from 2009 to 2011, Hemsley, 60, exercised stock options worth more than $170 million and made at least $51 million from share sales, making him the object of an “Occupy Lake Minnetonka” protest on the ice outside his lakeside home each winter.
The divergent fortunes of Reyes and Hemsley show that the U.S. has gone through two recoveries. The 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent last year, according to estimates released last month by the U.S. Census Bureau. Earnings fell 1.7 percent for the 96 million households in the bottom 80 percent -- those that made less than $101,583. The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks. In 2010, the top 1 percent of U.S. families captured as much as 93 percent of the nation’s income growth, according to a March paper by Emmanuel Saez, a University of California at Berkeley economist who studied Internal Revenue Service data.

Manufacturing in U.S. Expands Unexpectedly as Orders Rise (Bloomberg)
Manufacturing unexpectedly expanded in September after three months of contraction, reflecting stronger orders that ease concern the U.S. economy will slow further. The Institute for Supply Management’s factory index rose to 51.5 last month from 49.6 in August, the Tempe, Arizona-based group said today. Readings above 50 show expansion, and the September measure exceeded the most optimistic forecast in a Bloomberg survey. Stocks extended gains after the figures showed American factories are holding up in contrast to their counterparts in Europe and Asia. Sustained strength in motor vehicle sales and a rebound in demand for home construction materials are helping cushion manufacturers from weaker exports and cutbacks in business investment.
“Housing is definitely supporting,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “The economy still seems to be expanding, even if modestly, and that should keep overall manufacturing growing.” Still, “it’s hard to see things materially accelerating from here.” The median forecast in the Bloomberg survey was 49.7, and estimates from the 76 economists surveyed ranged from 48 to 51.2. A reading above 42.6 generally indicates an expansion in the overall economy, the ISM said. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

SEC Leads From Behind as High-Frequency Trading Shows Data Gap (Bloomberg)
The U.S. Securities and Exchange Commission, stung by criticism that it lacks the knowledge to analyze the computerized trading that has come to dominate American stock markets, is planning to catch up. Initiatives to increase the breadth of data received from exchanges and to record orders from origination to execution are at the center of the effort. Gregg Berman, who holds a doctorate in physics from Princeton University, will head the commission’s planned office of analytics and research. “What we will focus on is trying to shed more light on some of the big outstanding questions about market structure,” Berman said in an interview in Washington. “What is the impact of high-frequency trading? What’s the effect of high rates of order cancellations? What’s the connection between exchange- traded funds and individual stocks? How might different rules impact the market?”
Berman’s team will assess how market behavior has been altered after 15 years of regulatory reform and advances in technology that have left trading fragmented across 13 competing exchanges, 10 options markets and dozens of venues operated privately by brokerages. SEC Chairman Mary Schapiro, spurred into action by the stock rout of May 6, 2010, has made improving data collection a priority.

Obama Lead Over Romney Similar to 2008 Margin Over McCain (Bloomberg)
President Barack Obama’s advantage over Republican challenger Mitt Romney among female voters is similar to his pre-election margins four years ago, though Obama’s edge among all voters is smaller than at a similar point in 2008. Obama leads by 56 percent to 38 percent among women in a survey of likely voters released today by Quinnipiac University. Romney leads among men, 52 percent to 42 percent. The president had a four-percentage-point advantage among all voters. The president was favored similarly among women four years ago, while Romney is faring better among men than the 2008 Republican nominee, Arizona Senator John McCain, polls showed. An NBC News/Wall Street Journal poll released tonight gives Obama a 49 percent to 46 percent lead among likely voters, a narrowing from his 50 percent to 45 percent advantage in a comparable survey from two weeks ago. Obama’s lead grows over Romney, 48 percent to 43 percent, when third-party candidates are included.
The poll of 832 likely voters was taken Sept. 26-30 and has a margin of error of plus or minus 3.4 percentage points. In questions asked of 1,000 registered voters, 43 percent said Romney would do better at creating jobs and improving the economy, while 42 percent picked Obama. Among these voters, Obama was viewed favorably by 52 percent and unfavorably by 42 percent, while Romney was rated unfavorably by 44 percent and unfavorably by 41 percent. The error margin for this sample was plus or minus 3.1 percentage points.

Hong Kong Builders Set for Busiest Month in 6 Years on Low Rates (Bloomberg)
Hong Kong developers, seeking funds to tap an expanding government land supply, are this month preparing to sell the most homes in six years as expectations for prolonged low-interest rates fuel demand. Real estate companies led by New World Development Co., this year’s best performer in Hong Kong’s benchmark property gauge, may sell more than 3,300 units from eight new projects in October, according to Buggle Lau, chief analyst at Midland Holdings Ltd. (1200), the city’s biggest publicly traded realtor. That would be the highest monthly figure since August 2006, Lau said. Hong Kong Chief Executive Leung Chun Ying, who took over in July, has expanded property curbs initiated by his predecessor, including boosting home supply and raising mortgage downpayment requirements, to rein in an asset bubble exacerbated by the U.S. Federal Reserve’s third round of quantitative easing. Home prices have surged almost 90 percent since early 2009 on a shortage of new supply and an influx of mainland Chinese buyers.
“We have a combination of a red-hot market and a government trying to make more units available to buyers quicker,” said Wong Leung-sing, an associate director of research at Centaline Property Agency Ltd., the city’s biggest closely held realtor. “Of course, developers are rushing in.”

RBA Cuts Rate to 3.25% as Mining-Driven Growth Wanes: Economy (Bloomberg)
Australia’s central bank resumed cutting its benchmark interest rate to revive demand outside of a resource boom that may crest at a lower level than previously expected, sending the nation’s currency to a three-week low. Governor Glenn Stevens and his board lowered the overnight cash-rate target by a quarter percentage point to 3.25 percent, the Reserve Bank of Australia said in a statement in Sydney today. The decision to end a three-meeting pause was predicted by nine of 28 economists surveyed by Bloomberg News, while the majority had forecast no change. “The peak in resource investment is likely to occur next year, and may be at a lower level than earlier expected,” Stevens said. “As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur.”
Stevens’s gloomier outlook marked a reversal for a central bank governor who said after a June speech that he felt the need to do some “cheerleading” on the economy to rebut vocal pessimists. The RBA chief today signaled weaker growth at home and abroad, reflected in lower prices for the nation’s key exports of iron ore and coal, as Europe’s fiscal crisis weighs on global growth. “The RBA has rejoined other central banks around the world in what is becoming an increasingly coordinated policy response to anemic growth,” said Jarrod Kerr, director of Australia rates strategy at Credit Suisse Group AG in Singapore. “We continue to forecast further easing in this cycle.”

Portugal Tolerance for Higher Taxes Reaching Limit: Euro Credit (Bloomberg)
Prime Minister Pedro Passos Coelho’s tax increases during Portugal’s two-year recession may be about to backfire. Coelho said last week that income taxes probably will climb after he scrapped a proposal to raise the social-security tax rate. The CGTP labor group said Sept. 29 at a demonstration against austerity policies in central Lisbon that it may call a general strike. Portugal already has Western Europe’s poorest population in terms of output per capita. “It will be very difficult for the Portuguese middle class to continue to bear increases in income tax,” Rogerio Fernandes Ferreira, president of the Portuguese branch of the International Fiscal Association and a former secretary of state for fiscal affairs, said during a Sept. 25 interview in Lisbon. “What’s going to be attacked once again is tax on income.”
Coelho, like his counterparts in Spain and Greece, is stoking social unrest by bowing to demands from creditor countries for better fiscal controls. Portugal’s progress in meeting terms of its 78 billion-euro ($100 billion) bailout from the European Union and International Monetary Fund has helped the nation’s bond market. Borrowing costs dropped to the lowest since 2010 during a Sept. 19 sale of 1.29 billion euros of 18-month bills, while the difference in yield that investors demand to hold Portugal’s 10- year bonds instead of German bunds has narrowed to 7.5 percentage points from 16 percentage points on Jan. 31. The 10- year Portuguese bond rate is now about 8.9 percent, while two- year debt yields 5.1 percent.

Spain ready for bailout, Germany signals "wait"-sources
MADRID, Oct 1 (Reuters) - Spain is ready to request a euro zone bailout for its public finances as early as next weekend but Germany has signalled that it should hold off, European officials said on Monday.
The latest twist in the euro zone's three-year-old sovereign debt crisis comes as financial markets and some other European partners are pressuring Madrid to seek a rescue programme that would trigger European Central Bank buying of its bonds.

U.K. Home Prices Will Stagnate at Best, Nationwide Says: Economy (Bloomberg)
U.K. house prices fell in September and will at best stagnate over the next year as a weak labor market undermines confidence, Nationwide Building Society said. The average cost of a home dropped 0.4 percent from August, the Swindon, England-based lender said in a statement today. From a year earlier, values fell 1.4 percent to an average 163,964 pounds ($264,700). Separately, construction output fell for a second month in September, the first back-to-back contraction in almost three years. The data add to evidence of an uneven recovery after reports this week showed lending fell in August and manufacturing shrank in September. A report tomorrow will show growth in services probably slowed last month and the Bank of England is seen maintaining its bond-purchase plan a day later as policy makers assess the outlook for the U.K. economy and the euro-area debt crisis.
“Given the fragile nature of the economy, the huge squeeze on real incomes and offsetting impact of ultra-low interest rates, this gradual downward drift in house prices makes sense,” Ed Stansfield, an economist at Capital Economics Ltd. in London, said in a research note. “Boosting confidence will take a much stronger growth in the economy and real incomes, both of which seem some way off.” Bank of England Markets Director Paul Fisher said last week that third-quarter economic growth will be “very strong.” Still, that will partly reflect a rebound from the impact of an extra public holiday on gross domestic product in the second quarter. The British Chambers of Commerce said today that “U.K. economic performance remains weak and inadequate.”

Pro Farmer: After The Bell Wheat Recap (Source:CME)
Wheat futures faced pressure throughout the day, but they did move off their lows into the close. Losses ranged from 10 1/2 to 14 3/4 cents in nearby contracts. Spillover from soybeans along with investor risk aversion encouraged more selling pressure in the wheat market today. Plus yesterday's Crop Progress Report confirmed that recent rain has sped winter wheat planting in the Southern Plains.

Wheat Market Recap Report (Source:CME)
December Wheat finished down 12 3/4 at 871 1/2, 13 1/2 off the high and 7 3/4 up from the low. March Wheat closed down 13 at 883. This was 7 1/2 up from the low and 13 1/2 off the high.
December Chicago wheat ended the day sharply lower while KC and Minneapolis followed. Traders took profits for the second day in a row after it was reported that more Black Sea wheat was offered in the latest Iraq tender at a discount to other world origins. US exports remain behind the pace needed to reach this year's USDA forecast which continues to add pressure to prices. Romanian wheat was reportedly the cheapest offer on the tender since they have stepped into the export market as Russia moves aside. Russia may release 500,000 tonnes of wheat out of their domestic reserves amid rising food prices due to this year's lower grain production. The weekly Winter Wheat Planting report showed 40% of winter wheat planting was complete compared to 25% last week and 36% last year. Recent rainfall in Oklahoma and southern Kansas has helped soil conditions and early germination however Nebraska, central Kansas, and north central Kansas continue to suffer from dry conditions which could add support to prices down the road. The US Dollar was lower on the day but most commodity markets underperformed as Eurozone fears resurfaced overnight. December Oats closed down 6 1/4 at 360 1/4. This was 2 up from the low and 7 off the high.

Corn Goes Against the Flow (Source:CME)
Corn closed 1 1/2 cents higher in the December and 1/4 cent lower in the March. Soybeans closed 29 3/4 cents lower in the November and 29 3/4 cents lower in the January. Wheat closed 12 3/4 cents lower in the December Chicago, 14 3/4 cents lower in the December Kansas City, and 13 1/4 cents lower in the December Minneapolis. The U.S. dollar index is 0.111 lower at 79.713. December gold is $7.40 lower at $1,775.90 while December silver is $0.337 lower and December copper is $0.0080 higher. The Dow Jones Industrial Average is down 60 points at 13,455. November crude oil is $0.71 lower at $91.77. November heating oil is $0.0056 lower while November RBOB gasoline is $0.0560 lower and November natural gas is $0.045 higher.

Pro Farmer: After The Bell Corn Recap (Source:CME)
Corn futures faced pressure for much of the day, but rebounded late to finish narrowly mixed. Given a lack of bullish news today, corn futures were pressured by heavy spillover from the soybean and wheat markets and macro-economic uncertainty. But with harvest surging past the halfway point and given the tight supply situation, selling interest proved to be light.

Corn Market Recap for 10/2/2012 (Source:CME)
December Corn finished up 1 1/2 at 758 1/4, 1 3/4 off the high and 12 1/4 up from the low. March Corn closed down 1/4 at 759 3/4. This was 10 3/4 up from the low and 3 off the high. December corn ended the session slightly higher after trading lower early in the day. Bull spreading was prevalent and outright buying support was seen following last Friday's bullish USDA report. Harvest pressure, weak demand, and unstable outside markets added to the short term negative tone. The weekly Corn Harvest report showed 54% of the US harvest was complete compared to 39%. This was slightly below market expectations but favorable harvest conditions continue to push harvest along at a record pace. Corn basis was marginally higher for some areas of the Midwest, specifically for ethanol markets in Illinois and Iowa. Reports that farmers have shut off any further sales as they anticipate higher prices down the road added support to cash markets.
The US Dollar traded sharply lower throughout the day which added slight support to the corn market but marginal gains were offset by a sharply lower wheat market. November Rice finished up 0.13 at 15.37, equal to the high and 0.07 up from the low.

U.S. Corn, Soy Harvests Seen by FCStone Topping USDA Forecasts (Bloomberg)
Corn and soybean production in the U.S., the world’s largest grower and exporter last year, will exceed a government forecast, according to estimates by INTL FCStone Inc. (INTL) Corn output will be 10.824 billion bushels, up from 10.727 billion forecast last month by the U.S. Department of Agriculture, FCStone said today in an e-mail report from its West Des Moines, Iowa, office. A month ago, the commodity researcher and brokerage company said production would fall to 10.607 billion, compared with 12.358 billion a year ago. The soybean harvest will be 2.849 billion bushels, compared with 2.739 billion estimated in September, FCStone said. Last month, the USDA projected 2.634 billion, down from 3.094 billion a year earlier. The USDA will update its forecasts on Oct. 11. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
Corn futures on the Chicago Board of Trade rose to a record $8.49 a bushel on Aug. 10, and soybeans surged to an all-time high of $17.89 a bushel on Sept. 4.

Ukraine wheat exports at 2.6 mln T so far 12/13 – lobby (Reuters)
Ukrainian wheat exports have reached 2.6 million tonnes so far this season or 65 percent of the maximum volume agreed by the traders and government, Ukrainian Agrarian Confederation grain lobby said on Tuesday.

Brazil corn exports at record, ethanol up on US drought (Reuters)
Brazilian corn exports set a record in September and ethanol shipments reached their highest level since July 2009, the Trade Ministry said on Monday, after the worst U.S. drought in eight decades tightened world supplies.

GRAINS: Chicago soybeans slid to a three-month low as the record pace of the U.S. harvest and evidence of better-than-expected yields weighed on the market, while corn ticked higher amid tightening supplies. Wheat lost more ground, falling for a second consecutive day on forecasts of rain in the drought-parched U.S. Plains, which is expected to boost winter wheat planting. (Reuters)

SOFTS: Arabica coffee and sugar futures were firm as commodity markets consolidated gains after a strong start to the fourth quarter of the year. Liffe cocoa futures edged lower to hit a fresh two-month low as funds exited the market. (Reuters)

Rubber Bulls Back as Exporters Cut Most Since 2009: Commodities (Bloomberg)
The biggest restrictions on rubber exports since 2009 and record consumption are sending prices back to a bull market after a five-month slump, increasing costs for Bridgestone Corp. (5108) and other tiremakers. Thailand, Indonesia and Malaysia, accounting for 70 percent of global output, agreed to cut shipments by 300,000 metric tons, starting yesterday. That’s as much as China, the biggest user, imports in about five weeks and exceeds the 2013 supply surplus forecast by the International Rubber Study Group, which represents 35 nations. Tokyo-traded futures, a global benchmark, will advance 9.8 percent to 300 yen a kilogram ($3,841 a ton) by the end of the year, according to the median of 12 analyst estimates compiled by Bloomberg. Producers are cutting sales to boost prices that tumbled 49 percent since reaching a record in February 2011 because of a supply glut and weaker economic growth. When they reduced cargoes in 2009, futures more than doubled that year.
The latest curbs are coming as policy makers from the Federal Reserve to the European Central Bank pledge to buy more debt to bolster economies. The Singapore-based rubber group predicts record demand again in 2013. “The bear market is over,” said Makoto Sugitani, the head of commodity derivatives sales at Newedge Japan Inc. in Tokyo who correctly predicted in September 2010 that prices would advance 20 percent within six months. “The easing has spurred fund flows into equities and commodities and export cuts by the three producers will support prices.”

Natural Gas Fluctuates Near 10-Month High on Weather (Bloomberg)
Natural gas futures gained for a sixth day in New York, rising to a 10-month high, on speculation that cold weather next week will boost demand for heating fuels. Gas rose 1.5 percent as Commodity Weather Group LLC in Bethesda, Maryland, predicted below-normal temperatures in the Northeast and Midwest over the next six to 15 days. Gas broke resistance of $3.40 per million British thermal units yesterday, finding support there, said Chris Kostas, senior gas analyst for Energy Security Analysis Inc. in Andover, Massachusetts. “The market is building up a little enthusiasm,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “There is a lot of cold weather coming in the next couple of weeks.” Natural gas for November delivery rose 5.1 cents to $3.531 per million Btu on the Nymex, the highest settlement price since Dec. 2. The futures are up 18 percent this year.
November $3.75 calls, bets that prices will rise, were the most active gas options in electronic trading. They rose 1.4 cents to 6.6 cents on volume of 1,913 contracts as of 2:20 p.m. Calls accounted for 61 percent of options volume. The low temperature in Chicago on Oct. 12 may be 39 degrees Fahrenheit (4 Celsius), 8 below normal, and New York City may be 7 below normal at 44 degrees, according to AccuWeather Inc. in State College, Pennsylvania. Heating demand in the lower 48 states may be 60 percent above normal Oct. 8 through Oct. 12, data show from Weather Derivatives in Belton, Missouri.

Oil Drops a Second Day as Crude Stockpiles Advance a Fourth Week (Bloomberg)
Oil dropped for a second day in New York after an industry-funded report showed stockpiles climbed a fourth week in the U.S., the world’s biggest crude user. Futures fell as much as 0.4 percent after the American Petroleum Institute said crude inventories rose 462,000 barrels last week for the longest run of gains since May. An Energy Department report today may show supplies increased 1.5 million barrels, according to a Bloomberg News survey. Iraq, OPEC’s second-biggest oil producer, is “happy” with prices at current levels, according to Thamir Ghadhban, a senior adviser to Prime Minister Nouri al-Maliki. “The U.S. has been very sloppy demand-wise for a number of years,” said David Lennox, an analyst at Fat Prophets in Sydney. “We’ve seen those figures turn to increasing stockpiles. The market may be expecting that trend to continue.”
Crude for November delivery decreased as much as 35 cents to $91.54 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.62 at 11 a.m. Sydney time. The contract yesterday fell 59 cents, or 0.6 percent, to $91.89, the lowest close since Sept. 27 and the first drop in four days. Prices are 7.3 percent lower this year. Brent oil for November settlement slipped 24 cents, or 0.2 percent, to $111.33 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $19.71, from $19.68 yesterday.

OIL-Oil slips towards $112 as growth worries weigh
LONDON, Oct 2 (Reuters) - Brent crude oil slipped to around $112 a barrel as investors weighed a weaker outlook for fuel demand and sluggish economic growth against the risk of possible supply disruptions.
"Economic data is bearish for oil and the immediate risk for prices is to the downside," said Tamas Varga, oil analyst at brokers PVM Oil Associates in London.

POLL-U.S. crude inventories seen up on higher imports
Oct 1 (Reuters) - U.S. crude oil inventories are expected to have risen last week as imports increased, a preliminary Reuters poll of analysts showed on Monday.
The poll forecast crude stockpiles to have risen 1.5 million barrels for the week ended Sept. 28, on expectations of a rebound in shipments of foreign crude following a steep drop the previous week. All five analysts saw a build in stockpiles.

Russia's Sept oil output at new high of 10.41 mln bpd
MOSCOW, Oct 2 (Reuters) - Russia's oil output, the world's largest, edged up 0.3 percent in September compared with August to reach a new post-Soviet high of 10.41 million barrels per day (bpd) on the back of oil price increases, Energy Ministry data showed on Tuesday.
In tonnes, Russia's crude production stood at 42.59 million last month, the ministry said. The country is set to increase oil production this year to 514-515 million tonnes from 511 million tonnes in 2011.

Iraq oil exports hit highest level in 3 decades
DUBAI, Oct 2 (Reuters) - Iraq's oil exports rose to 2.6 million barrels per day on average in September, the highest in more than three decades, compared to 2.565 million bpd in August, an Iraqi oil ministry spokesman said on Monday.
Exports from Basra in the south were 2.18 million bpd in August, while shipments from northern Kirkuk were 420,000 bpd, including around 10,000 bpd taken by truck through Jordan, Asim Jihad said.

Recap Energy Market Report (Source:CME)
November crude oil prices traded higher during the initial morning hours, supported in part by a rally in risk assets and weakness in the US dollar. It seemed that morning weakness in global equity markets took some of the support away from the complex as slowing economic growth concerns festered. Meanwhile, lingering threats of Middle East supply disruptions seemed to offer a measure of support to the market. November crude oil prices drifted to their session lows late in the session. Expectations for this week's US crude oil inventory report are for supplies to have increased in the range of 1.5 million barrels last week.

Norway Port Set to Boom With Iron Ore Shipped to China: Freight (Bloomberg)
Three yellow construction cranes tower over heavy machinery and clusters of workers as they bustle in the Norwegian Arctic drizzle to get a new iron ore terminal ready by the beginning of next year. The port of Narvik, where the waters around a ship at the existing loading quay are tainted red by iron ore dust, is preparing for an economic boom. Iron ore from neighboring Sweden via Narvik is forecast by the port to surge fivefold by 2025, much of it bound for China. That is bringing wealth to a city lacking the oil riches most of Norway enjoys. Narvik is banking on Northland Resources SA (NAUR) which, like Sweden’s LKAB, is ramping up production at its Swedish iron ore mines. Northland plans to start extraction in Kaunisvaara in the fourth quarter and make its first shipments from Narvik early next year. The stock could more than double in value in the coming 12 months, according to the average share price estimate of five analysts surveyed by Bloomberg.
“Narvik is the optimal port solution for us,” said Northland Resources Chief Executive Officer Karl-Axel Waplan in a phone interview, noting the port’s proximity to Northland’s Swedish mines and its capacity to take the biggest vessels, which isn’t the case for Sweden’s Baltic ports. “Demand for iron ore will rise.” Even if Chinese annual growth falls to 7 percent, he said, Northland forecasts prices averaging 15 percent higher than today’s level over the next 15 to 20 years. The ice-free Narvik port, almost a two-hour flight north from Oslo, is 250 kilometers (155 miles) from Northland’s mine in Kaunisvaara, Sweden. Volumes may rise to 33 million metric tons by 2015 and to as much as 100 million tons by 2025, Rune Arnoey, head of the Port of Narvik, said in an interview. In comparison, northwestern Europe’s fourth-largest port, Amsterdam, handled 93 million tons of cargo in 2011.

Iron Ore Heads for Longest Bear Market in 20 Years: Commodities (Bloomberg)
Iron ore, the commodity most leveraged to China’s growth and Australia’s biggest export earner, is heading for the longest bear market in 20 years. Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), which control about two-thirds of seaborne iron ore supply, are spending about $47 billion on new and bigger iron ore mines from Brazil to Australia. The new cargoes are set to reach the global market just as China changes gear to lower growth expectations, following what may become its weakest performance since 1990. “We’re already seeing the beginning of the end of the first phase of economic development in China,” Alberto Calderon, chief commercial officer of Melbourne-based BHP, which is spending about $1 billion a month on its ore mines in Australia, said last month at a conference in Canberra. “The pace of demand for iron ore from China has slowed down by more than half.”
Prices reached a record $191.90 a metric ton on Feb. 16 last year and may plunge as low as $50 a metric ton before the middle of next year, according to Andy Xie, a former Morgan Stanley chief Asia-Pacific economist. They haven’t traded at that level since contract prices were set at $47 a ton in 2006. The supply of iron ore to China, the world’s second-biggest economy, has helped secure 21 recession-free years for Australia, forecast to earn about $65 billion from the commodity this year.

Gold Falls From 10-Month High Amid Weaker Demand in Asia (Bloomberg)
Gold futures fell from a 10-month high in New York on renewed concern that demand in Asia will remain slow. Silver also declined. Imports of gold by India, the world’s top buyer, fell 56 percent in the second quarter, according to the World Gold Council. Standard Bank Plc said in a report today that weak bullion demand has been in place since mid-September and is the most severe in more than a year. In the three months ended Sept. 30, prices jumped 11 percent, the most since June 2010, as a third round of monetary stimulus in the U.S. revived demand for the metal as a hedge against future inflation. “While the market has been going up on the stimulus fever, lack of support from physical demand is putting some pressure on prices,” Marc Ground, a commodity strategist at Standard Bank in Johannesburg, said in a telephone interview.
Gold futures for December delivery fell 0.4 percent to settle at $1,775.60 an ounce at 1:35 p.m. on the Comex in New York, dropping for the second time in three sessions. Yesterday, prices reached $1,794.40, the highest for a most-active contract since Nov. 14. Silver futures for December delivery slid 0.8 percent to $34.669 an ounce in New York, after reaching $35.445 yesterday, the highest since March 2. Holdings in silver-backed exchange-traded funds slid 122.8 metric tons yesterday to 18,503.6 tons, data compiled by Bloomberg show. Platinum futures for January delivery rose 0.1 percent to $1,687.20 an ounce on the New York Mercantile Exchange, the sixth-straight increase. Palladium futures for December delivery jumped 1.3 percent to $654.20 an ounce on the Nymex.

Gold Market Recap Report (Source:CME)
The gold market lacked a definitive direction today as the focus and hope for additional US easing was probably dealt a bit of a blow today. In fact, with a series of favorable scheduled data points over the last 36 hours or trade and expectations calling for a rather large gain in jobs in the ADP jobs report, it wasn't surprising to see gold undermined by good data today. While gold at times has benefited from increased flight to quality fears from Spain, seeing renewed anxiety toward the Euro zone debt situation might have given some gold longs pause today. With gold in the last COT report positing a non commercial and non reportable net long of 293,171 and gold to this week's highs reaching another $28 an ounce above the level where the COT report was measured it is possible that some traders view gold as overbought.

Soybean Complex Market Recap (Source:CME)
November Soybeans finished down 30 1/2 at 1529 3/4, 31 1/2 off the high and 3 1/4 up from the low. January Soybeans closed down 30 1/4 at 1532 3/4. This was 2 3/4 up from the low and 31 1/4 off the high. December Soymeal closed down 11.6 at 462.9. This was 0.7 up from the low and 12.4 off the high. December Soybean Oil finished down 0.5 at 50.69, 0.66 off the high and 0.61 up from the low.
November soybeans traded sharply lower on the day while soybean meal and oil followed. Soybean oil saw significant pressure after Malaysian Palm Oil futures dropped to a fresh 3 year low overnight. Long liquidation and better than expected soybean yields continue to be a drag on prices in the near term. Many traders feel the USDA could increase the average US soybean yield by nearly 2 bushels per acre on the October 11th Supply and Demand report with current yield estimates at 35.3 bushels per acre. Soybean basis bids fell in Decatur, IL and Lafayette, IN yesterday which added to the downside pressure and it was reported that additional weakness was seen in Frankfort, IN today as harvest advanced. Many in the trade still believe Brazil is completely out of soybeans to sell for export going forward until their harvest is underway late in the 1st quarter of 2013 and this could add long term support to the market as importers come to the US for soybeans. Taiwan issued an international tender to purchase up to 180,000 tonnes of soybeans for December through February shipment this morning.

Soybeans Decline as Rain Boosts South America Crops; Corn Rises (Bloomberg)
Soybean futures fell to a 11-week low on speculation that rain will boost yield potential in South America, reducing demand for supplies from the U.S., the world’s biggest exporter. Corn rose. Rain this week in southern Brazil and most of Argentina will improve soil moisture for planting and early crop development, Global Weather Monitoring said in a report today. Soybean production in Brazil may rise 19 percent from a year earlier to a record 79.1 million metric tons when harvesting begins in January, the consultant Celeres said yesterday. “Rain in South America means the crops are off to a good start, and that increases the odds for a big harvest,” Brian Grete, the senior market analyst for Professional Farmers of America newsletter in Cedar Falls, Iowa, said in a telephone interview. “Rising crop potential has reduced speculative buying.”
Soybean futures for November delivery dropped 1.9 percent to close at $15.305 a bushel at 2 p.m. on the Chicago Board of Trade, after touching $15.265, the lowest since July 13. The oilseed, used to make animal feed and vegetable oil, has tumbled 14 percent since reaching a record $17.89 on Sept. 4 on speculation that August rains boosted U.S. yields. The government will release its production update on Oct. 11. Corn futures for December delivery gained 0.2 percent to $7.5825 a bushel on the CBOT. The grain jumped 19 percent in the three months ended Sept. 30, the biggest quarterly gain since the end of 2010, after the worst drought in more than 50 years reduced damaged crops. The U.S. Department of Agriculture estimates production will tumble 13 percent this year.
Deutsche Bank AG said today that corn futures may rise 10 percent after the U.S. harvest is completed as demand exceeds supply. About 54 percent of the corn was gathered as of Sept. 30, up from an average of 20 percent for that time of year in the previous five seasons, the USDA said yesterday in a report. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Soybeans Reach Lowest Price Since July on U.S. Harvest Progress (Bloomberg)
Soybeans fell in Chicago to the lowest price since July and corn slipped as harvesting in the U.S. advanced at the fastest pace in at least three decades, helped by warm, dry weather. About 41 percent of the soybean crop in the U.S., last year’s largest grower, was harvested as of Sept. 30, compared with 15 percent a year earlier, the Department of Agriculture said yesterday. Fifty-four percent of corn was collected, up from 18 percent. The harvest is progressing at the fastest rate since the USDA began collecting data in 1981. “It’s more the pace of harvesting that’s pushing prices lower, as it eases supply concerns,” Chung Yang Ker, an analyst at Phillip Futures Pte, said from Singapore. “There’s also the anticipation for larger-than-expected yields.”
Soybeans for November delivery fell 1.4 percent to $15.38 a bushel by 7:05 a.m. on the Chicago Board of Trade. The oilseed earlier touched $15.355, the lowest for a most-active contract since July 13. Corn for December delivery dropped 0.7 percent to $7.5175 a bushel. Crops remain in the worst condition since at least 1988, with 33 percent of soybeans and 50 percent of corn rated poor or very poor as of Sept. 30 after drought this year hurt yields, USDA data show. Farmers may collect 10.727 billion bushels of corn, a six-year low, while the soybean harvest at 2.634 billion bushels may be the smallest since 2003, the USDA said Sept. 12. The agency is slated to update crop forecasts Oct. 11.
“As harvest results come in, the market appears to be more comfortable with availability,” Deutsche Bank AG analysts including Christina McGlone-Hahn said in an e-mailed report today. “While sentiment has turned more negative as the quarter comes to a close, we go back to fundamentals. Supply and demand balances are tight, particularly in the soybean complex.” Wheat for December delivery slid 1.4 percent to $8.72 a bushel, extending yesterday’s 2 percent slump. In Paris, November-delivery milling wheat fell 0.6 percent to 261 euros ($338) a metric ton on NYSE Liffe.

Ukraine to cut 12/13 sunoil output, exports – analyst (Reuters)
Ukraine, the world's leading exporter of sunflower oil, is likely to reduce sunoil exports to 3.09 million tonnes in the 2012/13 season from 3.23 million tonnes in 2011/12 due to lower production, analyst UkrAgroConsult said on Tuesday.

EDIBLES: Malaysian palm oil futures slid further to their lowest in more than two years, as rising stocks and the record pace of the U.S. soybean harvest pointed to a growing global supply of vegetable oils. (Reuters)

Palm Oil Slumps Most Since October 2008 to Lowest in Three Years (Bloomberg)
Palm oil had its biggest daily plunge since October 2008 and fell to the lowest level in almost three years on concern slowing demand will cut shipments from the biggest producers, swelling a glut as output expands. The December-delivery contract lost 8.5 percent to 2,255 ringgit ($739) a metric ton, the lowest close for the most- active month on the Malaysia Derivatives Exchange since November 2009. Futures have plunged 25 percent in five weeks. Stockpiles in Malaysia will increase in October, November and December and may reach a record 3 million tons by January, Dorab Mistry, director at Godrej International Ltd., said Sept. 23. Production peaks between July and October. Industry estimates for the southern region of Peninsular Malaysia showed output grew more than 26 percent in September, said Paramalingam Supramaniam, a director at Pelindung Bestari Sdn.
“These figures were widely unpopular and paved the way for large liquidation at the close,” said Paramalingam. “Production pressure coupled with soybeans tumbling to the lowest level since July prompted an outburst of fresh selling by speculators.” The southern states of Johor, Negeri Sembilan and Malacca accounted for about 20 percent of crude palm-oil output in 2011, according to the Malaysian Palm Oil Board. The 14-day relative strength index was at 15.9 today and has stayed below 30 since Sept. 25. A reading below 30 is seen by some investors and traders as an indicator that the commodity is oversold and poised to rise.

Prices Tumble
Futures have plunged 38 percent from a 13-month high in April as a global economic slowdown hurts demand for the oil used in everything from candy to biofuel. Exports from Indonesia, the top producer, declined 6.6 percent in August to the lowest in two months as sales to China and the European Union fell, said the Indonesian Palm Oil Association. In Malaysia, the second-largest supplier, shipments fell 0.7 percent to 1.44 million tons in September, Intertek said. “Slowing demand is probably more worrying and you’ve got rising stockpiles as well,” Carey Wong, an analyst at OCBC Investment Research Pte., said by phone from Singapore today. “Nobody is immune to the economic slowdown.”
Soybean oil for December delivery dropped 1.5 percent to 50.44 cents a pound on the Chicago Board of Trade. That takes soybean oil’s premium to palm to $373.46 a ton, the biggest since October 2008. The gap has widened almost sixfold since the beginning of May. Soybeans for November delivery lost 1.3 percent to $15.4025 a bushel, the lowest level for the most active contract since July.

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